Loan Rates

rarasarr23

I am looking to take out a loan, first time for me, for some home improvements. I have a excellent credit rating but don't utilize my credit cards or use my overdraft.

My bank are offering me £5000 at a rate of 9.6% is this a good rate? This is over three years, although I hope to pay it off within 12 months.

Zopa were offering me 12.6%

CliveOfIndia

It's almost impossible to say what's a good or a bad rate.  A lender will have their "baseline" rate, but what they actually offer you depends on a multitude of factors - your credit history, debt-to-income ratio, and a host of others.

Not using your overdraft is a good thing, not using your credit cards is less good.  It's not bad as such, but using a card properly (always paying in full every month) can help to build up a good history, which may help if you have very little history.

Depending on how much you're looking for, a 0% purchase or a Money Transfer card may be options to consider, especially if you're confident you can repay them within 12 months.  A 0% purchase card is only any good if you can use it - buying items from a shop is fine, but you'll often find that tradesmen won't accept credit cards.  That's where a MT card can help, though there's almost always a fee to factor in.  And in either case, you must make sure you'll be able to clear the balance in full when the promotional rate expires.

But if you can realistically pay it off within 12 months, would it be feasible to postpone the improvements for a year and save up?  That would probably be the best approach.

moneysaver1978

What kind of home improvement work are you looking? Some firms offer interest-free loans for things like kitchens and bathrooms.

rarasarr23

CliveOfIndia said:

It's almost impossible to say what's a good or a bad rate.  A lender will have their "baseline" rate, but what they actually offer you depends on a multitude of factors - your credit history, debt-to-income ratio, and a host of others.

Not using your overdraft is a good thing, not using your credit cards is less good.  It's not bad as such, but using a card properly (always paying in full every month) can help to build up a good history, which may help if you have very little history.

Depending on how much you're looking for, a 0% purchase or a Money Transfer card may be options to consider, especially if you're confident you can repay them within 12 months.  A 0% purchase card is only any good if you can use it - buying items from a shop is fine, but you'll often find that tradesmen won't accept credit cards.  That's where a MT card can help, though there's almost always a fee to factor in.  And in either case, you must make sure you'll be able to clear the balance in full when the promotional rate expires.

But if you can realistically pay it off within 12 months, would it be feasible to postpone the improvements for a year and save up?  That would probably be the best approach.

Thanks for replying. I do use the credit cards, just do not max them out, and always pay in full each month.

Sadly, my own credit cards are currently not offering any money transfer offers, shame, as I'd forgotten had one previously which was a great option. Will look for a MT Card though.

I've put off the home improvements for the last four years! I was supposed to be hopefully moving, and after two potential moves that went wrong last year, I have decided to stay put, and put the work in here!

rarasarr23

moneysaver1978 said:

What kind of home improvement work are you looking? Some firms offer interest-free loans for things like kitchens and bathrooms.

It's my kitchen that needs some work, as I am disabled and it just no longer is practical for me. My bathroom has recently been done here through a DFG, and the council, which has made a huge difference.

I also want some cheap-ish fitted wardrobes, and three new radiators, plus some new carpets.

As for the kitchen, nothing expensive or overly fancy, just practical, such as better placed cupboards, drawers and making the oven higher. I do know of a very good local kitchen company who did my dad's 10 years ago, wonder if they offer interest free options.